Archive for the ‘News’ Category

Thursday, May 6th, 2010

The following is excerpted from the 27 April 2010 edition of “”.

Canadian companies can develop new export opportunities to Colombia – and steal market share from the United States – once a new free trade agreement is ratified with the South American nation, Colombian Trade Minister Luis Plata says.

While talks toward a U.S.-Colombia free-trade agreement have stalled, Canada appears on track to pass a trade deal with Colombia in coming weeks, eliminating tariffs on products that are still subject to trade barriers with the U.S….

[Plata] said it would be logical for Colombians to shift more purchases of agricultural products like wheat, corn and barley from the U.S. to Canada if they can be imported more cheaply. Colombian products heading to Canada, which often arrive by way of a U.S. importer, could begin flowing directly, he said.

And Mr. Plata said other new business opportunities will inevitably emerge with a country of 45 million people once a deal is in place, suggesting, for example, that Colombia could begin exporting biofuels to countries like Canada. Trade between the two countries totalled about $1.3-billion last year, accounting for less than 1 per cent of Canada’s trade….

The biggest challenge, however, remains Colombia’s reputation for violence, illegal drugs and a long-running rebel insurgency – a reputation Mr. Plata said is out of date.

Since the government of President Alvaro Uribe took office in 2002 and launched a “tremendous effort” to reform policing and the judiciary, Mr. Plata said the country’s murder and kidnapping rates are down 50 per cent and 85 per cent respectively since 2002, and that a history of violence against union organizers is also being curbed.

Colombia, he said, is now launching a rebranding campaign to alert the world to its improving legal and human rights record.

“I’ll never deny we have difficulties and challenges, but right now the reality in Colombia is far better than it was seven years ago, and it’s far better than the image that we have,” Mr. Plata said.

… The Liberals have already agreed to support the deal after winning a concession that both countries will conduct an annual review of their respective progress on human rights violations. Mr. Plata said each government will do its own human rights assessments under the proposed compromise. Colombia’s will be done by his trade ministry, he said.

Colombia is now pursuing free-trade deals with 49 countries as part of a pro-business stance that has opened the country for trade since 2002. Canadian companies have directly invested over $4-billion in Colombia in the past five years, especially in the mining sector….

Monday, May 3rd, 2010

HST and GST: CRA Provides Answers

The Canada Revenue Agency has provided answers to questions asked by CSCB members regarding HST on customs brokers’ services. These questions and answers are reproduced below and are also available as a PDF document.

Members with additional questions, or questions regarding any of the information contained in this message, can contact the CSCB at
CSCB: The Canada Border Services Agency requires an export permit for certain goods being exported from Canada. A Canadian customs broker applies for the export permit (in Canada) on behalf of the Canadian exporter.

(a) If the Canadian exporter is registered for the GST, does GST/HST apply to the broker’s service for applying for the permit?  What if the Canadian exporter is not registered?

CRA: A supply of a service is made in Canada by a Canadian customs broker.  A determination would have to be made as to whether the supply of the service is made in a participating province, using the proposed place of supply rules in respect of services announced by the Department of Finance on February 25, 2010, in its document “Place of Supply, Self-Assessment and Rebate Rules for the Harmonized Sales Tax (HST) <> ” and by the CRA on February 26, 2010, in its document “Place of Supply Rules for Determining whether a Supply is Made in a Province <> “.  There are no provisions in the ETA that would zero-rate the GST or HST in this scenario.  As a result, GST could be payable at the rate of 5% or HST could be payable at the rate of 12%, if the service is deemed to be made in BC, or 13%, if the service is deemed to be made in the other participating provinces.  Note that the rate of HST in Nova Scotia is proposed to increase to 15%.

The answer is the same for a Canadian exporter who is not registered.

(b) If a registered U.S. importer of the goods is billed by the Canadian customs broker for obtaining the export permit, does GST/ HST apply to the broker’s service?  What if the U.S. importer of the goods is not registered?

CRA: We assume that the U.S. importer is the recipient of the service supplied by the Canadian broker.  While the supply of the service would be deemed to be made in Canada, the supply of the services would likely be zero-rated under Part V of Schedule VI to the ETA.  Because a customs broker would often be considered an agent of its client, section 5 of Part V of Schedule VI would apply to zero-rate a supply made to a non-resident person of a service of acting as the person’s agent or of arranging for, procuring or soliciting orders for supplies by or to the person, where the service is in respect of a supply to the person included elsewhere under Part V of Schedule VI or a supply made outside Canada by or to the person.

Where an agency relationship does not exist, it is possible that the general zero-rating provision for services under section 7 of Part V of Schedule VI may apply to zero-rate the supply to the unregistered non-resident.

The answer is the same for a U.S. importer who is not registered.


CSCB: If a Canadian customs broker who is also licensed as a U.S. broker prepares an entry for goods entering the U.S., and bills for this service from within Canada, is the service taxable if it is billed to the U.S. non-registrant importer? U.S. registrant importer? What if the Canadian exporter is billed for the preparation of a U.S. customs entry?

CRA: We assume that part of the service is performed in Canada, and therefore the place of supply of the service is deemed to be made in Canada.

The location at which a supplier prepares a bill for a supply is not relevant for determining the tax treatment of the supply.  Under the ETA place of supply rules for services, a service will be deemed to be supplied in Canada if it is performed, or is to be performed, in whole or in part in Canada.  As a result, a supply of a broker’s service that is made in Canada will generally be subject to GST at the rate of 5%, or HST at the rates of 12% or 13% if deemed to be supplied in BC or the other participating provinces, respectively, if the recipient of the supply is a Canadian resident  (note that the rate of HST in Nova Scotia is proposed to increase to 15%).

If the recipient is a non-resident, and the Canadian broker is acting as the recipient’s agent when the service is being provided, the supply of the service would likely be zero-rated under section 5 of Part V of Schedule VI, regardless of the non-resident’s GST/HST registration status.


CSCB: Can you clarify customs brokerage services that are zero-rated? Does the fact that exports are zero-rated mean that any services provided with respect to exported goods are not subject to GST/HST? Are examples available?

CRA: Customs brokerage services may be zero-rated if they meet the conditions outlined in section 5 of Part V of Schedule VI to the ETA, as described in 1(b) above.  If an agency relationship does not exist between the broker and the client, section 7 of Part V of Schedule VI may zero-rate the supply of the broker’s services where none of the exclusions in the provision apply.

Regarding the second part of your question, the tax status of brokerage services depends on:

a) Whether the service is performed in whole or in part in Canada (if not, the supply of a service is considered to be made outside Canada and is not subject to GST/HST);

b) If the supply is deemed made in Canada, whether the supply is determined to be made in a participating province in accordance with the place of supply rules for customs brokerage services outlined in Finance’s announcement of February 25, 2010 and CRA’s Technical Interpretation Bulletin of February 26, 2010.  Note that where the supply of a service does not meet the description of a “customs brokerage service” under the Place of Supply (GST/HST) Regulations, the general place of supply rules for services, as outlined in both the Finance and CRA documents, will apply to determine if the supply is made in a participating province; and

c) Whether the conditions for zero-rating under section 5 or 7 of Part V of Schedule VI to the ETA are met, as discussed above.

No examples are specifically available.

Monday, May 3rd, 2010

The following is excerpted from the 30 April 2010 news release by DFAIT.

The Honourable Peter Van Loan, Minister of International Trade, took his free trade message to Toronto’s business community today in support of a Canada-European Union comprehensive economic and trade agreement. In a keynote speech to the Economic Club of Canada he said Canadians stand to benefit from strengthened economic ties with the European Union, the world’s wealthiest single common market.

According to a Canada-European Union joint study, a deal is expected to deliver a $12-billion annual boost to the Canadian economy.

“In addition to lowering taxes, investing in innovation and promoting freer enterprise, our government is expanding market opportunities to help Canada’s economy on the path to a lasting recovery,” said Minister Van Loan. “A comprehensive economic and trade agreement with the European Union will free trade, open doors for our businesses and create jobs for Canadians.”

For Canada, these negotiations represent our most significant trade initiative since the North American Free Trade Agreement. The North American Free Trade Agreement has doubled Canada’s trade with the United States, tripled trade with Mexico and created nearly 4.1 million jobs since it came into effect in 1994.

The Canada-European Union talks include the participation of the provinces at the table—a first for a free trade negotiation. Minister Van Loan underlined the important role of the provinces in working to deliver a successful agreement, on schedule, that aims high.

A third round of talks began in Ottawa on April 19. A fourth negotiating round will take place in Brussels in July 2010.

An agreement will benefit many sectors of the Canadian economy, including aerospace, chemicals, plastics, aluminum, wood products, fish and seafood, automotive vehicles and parts, agricultural products, transportation, financial services, renewable energy, information and communication technologies, engineering and computer services.

The European Union is the world’s largest exporter of goods and services and is Canada’s second most-important partner for trade and investment after the United States.

Wednesday, April 28th, 2010

The following is excerpted from today’s edition of the “Canadian Press”.

It may well be the biggest and most important trade negotiation that most Canadians have never heard of.

While most of the news out of Europe of late has had to do with the Greek debt crisis and an ash-spewing volcano in Iceland, about 60 Canadian officials have been huddled in contentious trade talks with their European counterparts – at least video images of their counterparts – in what used to be Ottawa’s city hall by the Rideau.

There have been no demonstrators in front of the building denouncing a sell-off of Canadian sovereignty, and hardly a mention in the media or the House of Commons.

But if you listen to the critics, what is at stake is in some ways more troubling than the Canada-U.S. free trade talks of the late 1980s – over which an election was fought – or the NAFTA deal that followed.

“What we want is the most ambitious trade agreement we’ve ever had,” federal Trade Minister Peter van Loan said in an interview with The Canadian Press.

“We’re looking for something that is deeper and broader than even NAFTA, and this is with the world’s largest economy.”

The two sides are now in the third round of talks, with two more planned. If all goes well, Van Loan hopes to see ink on the Comprehensive Economic and Trade Agreement or CETA by late next year….

The talks involve practically everything it is possible for the two sides to place on the table – not just the usual stuff of tariffs and duties, but services, investment, agricultural subsidies, government procurement at the national and subnational levels, intellectual property, regulatory rules and labour mobility.

Given the size of the European Union market – 27 countries, 500 million people and $19 trillion in gross national product – Canada has been eager to get a deal done for years. The Europeans, not so much.

And that’s the problem, according to critics, who say Canada has appeared too eager in dealing with a savvy economic superpower.

“The Europeans could walk away without any negative political repercussions, whereas for our government, it has become a centrepiece of their foreign policy,” said Scott Sinclair, a researcher for the Canadian Centre for Policy Alternatives, who recently wrote a report on the negotiations.
Sinclair says the talks are not so much about freeing up trade, noting that tariffs on the more heavily traded items are already under three per cent, but about weakening the ability of governments on both sides of the Atlantic to regulate how multinationals operate.

The Europeans, he says, want to do away with Canada’s supply management system in dairy and poultry, along with the Wheat Board and the ability of provincial and municipal governments to favour local supplier in their procurements. One big prize Europe covets is Ontario’s green technology initiative, he says.

In return, he believes, Canada would get to send more raw materials to Europe.

Not so, says former Liberal finance minister John Manley, who now heads the Canadian Council of Chief Executives, the country’s most influential business lobby group.

Manley argues that with the U.S. economic star fading, Canada needs to diversity its trade and Europe, a prosperous and in many ways similar economy to Canada’s, would bring major benefits.

Wednesday, April 21st, 2010

The following press release was issued today by the WCO.

The World Customs Organziation (WCO) has called on Customs authorities around the world to expedite Customs clearances of air freight, to the greatest extent possible, to support rapid global recovery of aircargo supply chains following the volcanic ash cloud crisis that shutdown much of Europe’s airspace for one week, resulting in the airline industry suffering its worst disruption since 9/11.

Eurocontrol, the pan-European air traffic control agency, estimates that around 95 000 flights were grounded since no-fly zones were introduced on 15 April. This affected not only passengers but also left trade stranded in many countries across the globe. According to the BBC, IATA Director General Giovanni Bisignani estimates the shutdown to have caused losses in revenue to the airline industry of 250 million US Dollars per day. Losses to global business are expected to run into billions.

More favourable weather conditions yesterday enabled European authorities to begin a phased opening of airports but it is expected to take days to recover and clear the backlog. More than 50% of the normal number of flights is expected to land and take-off across Europe with the lifting of the ban.

WCO Secretary General Kunio Mikuriya said, “The global Customs community is ready to support international efforts that will bolster recovery. I have issued this call as a means of galvanising Customs authorities to facilitate trade by expediting Customs clearances of air freight to the greatest extent possible as this will play an important role in ensuring that global trade begins to flow as smoothly and as fast as possible.”

The impact on trade of the European shutdown is being felt across the globe. Many firms dependent on rapidly moving their goods, especially perishables, using fast air freight had felt the strain. A Reuters report states that Kenya’s flower exporters are said to have lost up to 2 million US Dollars per day while South Korea’s Incheon International Airport, the world’s fourth-busiest cargo handler in 2008, suffered 3,216 tonnes of lost shipments to Europe in the first four days of the crisis.

Mr. Mikuriya added, “Customs are aware that since moving to just-in-time production methods, busineses are vulnerable to any trade disruptions. To facilitate trade and fast clearance of goods, the WCO has developed a range of instruments and tools that assist Customs in their daily operations. Two in particular can help Customs to speed up its response to recovery efforts – the WCO revised Kyoto Convention on the simplification and harmonization of Customs procedures and the WCO Immediate Release Guidelines.”

The WCO believes that efficient Customs procedures are critical, even more so in a time of crisis and to ensure rapid recovery. It will continue to promote Customs best practices and enusre that administrations have the capacity to effectively deal with the challenges posed by global trade.

Wednesday, April 21st, 2010

The following is excerpted from today’s edition of “The Journal of Commerce”.

Europe’s airline industry lurched back to life Wednesday as carriers put planes back into the air after being grounded for nearly a week by a volcanic ash plume from Iceland. Most airports across Europe were open April 21.

But airlines warned it will take weeks to clear up several thousand metric tons of cargo and well over 100,000 passengers stranded at airports around the world.

Eurocontrol, the European air traffic agency, said it expects 21,000 flights to take off Wednesday, 75 percent of the 28,000 that would normally be scheduled.

British Airways expected to operate 70 percent of its schedule, and cargo airlines began to reopen air express hubs.

But FedEx Express said it would take days to clear out its backlog and had restrictions on shipments needing special handling.

Manufacturers depending on air shipments were still struggling after a week with deliveries coming in only fits and starts.

Airbus said Tuesday it was facing parts shortages that could slow down its aircraft production line. And some European auto plants warned of layoffs and factory shutdowns because needed car parts had run out.

The majority of continental European airports, including the top three cargo hubs, Frankfurt, Paris Charles de Gaulle and Amsterdam, opened early on Tuesday April 20 as the ash cloud dispersed with only UK airspace remaining a no-fly zone.

The UK eventually opened its airports, including London Heathrow, Europe’s fourth largest cargo airport, late Tuesday night following protests from airlines that it was applying stricter safety rules than European authorities….

With some 20 British Airways long haul aircraft heading toward London Heathrow and Gatwick airports, the Civil Aviation Authority lifted the ban on flights in UK airspace.

The International Air Transport Association estimated the flight bans imposed on April 15 had cost airlines more than $1.7 billion by April 20.

Thursday, April 15th, 2010

The following is excerpted from the 15 April 2010 edition of “American Shipper”.

At a House hearing on efforts to combat Mexican drug cartels and reduce violence on the Southwest border, new U.S. Customs and Border Protection Commissioner Alan Bersin emphasized that properly designed security measures can protect the nation without harming commerce.

“We can be economically competitive as we enhance our security. We will adopt strategies that simultaneously improve security and expedite legitimate trade and travel,” Bersin said in his first testimony before Congress since being appointed by President Barack Obama in late March without going through the Senate confirmation process.

CBP’s refrain during the past eight years has been that it’s twin missions are border security and trade facilitation, although many importers and exporters say security requirements still trump efforts to simplify Customs clearance and compliance procedures.

Bersin, who spent the previous year as Department of Homeland Security Secretary Janet Napolitano’s special representative on southwest border affairs, told the House Appropriations homeland security subcommittee that he wants to build on trusted trader and traveler programs such as FAST, SENTRI, NEXUS and Global Entry.

The Free and Secure Trade (FAST) program offers expedited clearance for carriers and shippers enrolled in the Customs-Trade Partnership Against Terrorism program by reducing the amount of documentation required at crossing, providing dedicating lanes to FAST participants and reducing inspection levels. Under the program, drivers must be pre-vetted as low-risk through a review of their identification and citizenship documents.

SENTRI and NEXUS are southern and northern border programs, respectively, that allow registered travelers to speed through border checkpoints and Global Entry offers the same benefit at airports for international travelers.

“We can have enhanced security while reducing the cost and inconvenience to legitimate trade and travelers” through better targeting that allows Customs officers to focus on the small amount of illegitimate inbound cargo that poses a potential safety and security risk, Bersin said….

Tuesday, March 2nd, 2010

The following is excerpted from the 26 February 2010 edition of “”.

Canada and U.S. authorities are talking about extending cross-border security measures that were implemented for the 2010 Olympics in Vancouver and were to end with the closing of the Winter Games.

The RCMP and the U.S. Coast Guard have jointly patrolled the waters off Vancouver since the beginning of the month, boarding nearly 200 vessels and interviewing about 500 people in their efforts to maintain security, RCMP Sergeant Duncan Pound of the border integrity program said in an interview….

The joint patrols will end with the Paralympics but spokesmen from the two agencies said yesterday legislation that would allow joint maritime policing on a permanent basis is on the agenda of both the U.S. and Canadian governments.

Also, U.S. Senator Patty Murray of Washington state has asked Secretary of Homeland Security Janet Napolitano to continue funding for the 2010 Olympic Co-ordination Centre in Bellingham, Wash., which was opened specifically to co-ordinate the U.S. response to any terrorist attack or domestic emergency during the Winter Games.

Ms. Napolitano… said earlier this week she has heard “great reports” about the centre and would talk to people this weekend on whether more funding makes sense.

The centre, located 30 kilometres south of the Canada-U.S. border, brought together 40 U.S. federal, state and local agencies, including military intelligence groups, the navy, national guard, air force, coast guard and several groups involved in responding to emergencies from snowstorms to highway pileups.

Several federal and provincial government agencies from Canada were also involved, monitoring activities at the centre and establishing procedures to facilitate joint responses to cross-border events….

The joint RCMP/USCG maritime patrols, known as Siderider, have in effect erased the border on the water, enabling armed officers from either country to cross the border and play a role in enforcing the law. Each RCMP vessel has a U.S. Coast Guard member as well as two or three Mounties, while each USCG boat has a Mountie. The RCMP takes the lead when dealing with Canadians while the U.S. Coast Guard does the same with Americans….

The Olympics is the third pilot project on joint maritime patrolling that the two countries have participated in, officials said. The patrols, with both RCMP officers and USCG members, are free to cross the border in pursuit of any vessel.

Under normal conditions, the U.S. Coast Guard would not enter Canadian waters and the RCMP would stop at the U.S. border. “It is just a quick getaway for criminal adversaries who try to evade law enforcement,” U.S. Coast Guard Commander Peter Martin said yesterday. “This addresses the problem so we can maintain continuous pursuit, while simultaneously respect the sovereignty of both countries,” he said.

Thursday, February 25th, 2010

In 2006, the BCCC created a sub-committee to undertake a fundamental review of the CBSA Administrative Monetary Penalty System (AMPS). The purpose of the review was to make amendments to AMPS to ensure it was fair, consistent, and transparent, and was easy to administer. Streamlining the penalty regime and reducing the number of contraventions was also part of the sub-committee’s mandate.

Some of the changes to AMPS will be implemented on April 14th of this year. These changes include:

- a new penalty amount structure, based on risk;
- new penalty amounts; and
- a 30-day delay in the escalation of certain penalty levels.

The collapsing and renumbering of penalties will take place at a later date.

Available at this time is a Customs Notice highlighting the phases of implementation ; a short document listing all current and revised penalty amounts ; a summary of the 30-day escalation of certain penalty levels ; and the penalty grid .

A few contraventions have penalty amounts that are outside the grid as penalty escalation was not considered suitable, for example, failure to keep any records at all which attracts a flat penalty amount. Note that most of the percentage of value for duty penalty amounts have been eliminated, as well as penalty amounts based on the value for duty less than $1,600. Consequently, this led to the elimination of a number of contraventions.

Members should note in particular changes to the following two penalties: 1) late accounting and 2) failing to provide a certificate, licence, permit or information that is required before interim or final accounting, and before the goods are released (C071).

The penalty for 1) late accounting has increased from $25.00 to $100.00 and 2) the penalty under C071 has increased from $100 t o $500 for the first infraction.

To improve access to the corrections process, regions have been advised to include the issuing office fax number on the Notices of Penalty Assessment for a faster application process.

The CSCB Board of Directors has managed our participation in the AMPS review, and continue their work on this issue.

Members will be provided with additional information, as soon as it becomes available.

Comments can be directed to the CSCB at

Related Links: PenaltyAmounts_20090122.pdf

Monday, February 22nd, 2010

The following was reported on in today’s edition of ST&R’s “WorldTrade Interactive”.

The European Commission (EC) issued a working paper this month that blasts a U.S. statute that requires all foreign cargo containers shipped to the United States (except U.S. and foreign military cargo) to be scanned by non-intrusive imaging equipment and radiation detection equipment at the foreign port before being loaded on a U.S.-bound vessel by July 1, 2012. The EC believes that if 100 percent scanning were implemented in European ports “it would be excessively costly, would be unlikely to improve global security, would absorb resources currently allocated to EU security interests, and would disrupt trade and transport within the EU and worldwide.” The report states that the EU does not contemplate implementing 100 percent scanning of containers at export and will instead prioritize investments to enhance multilayered risk management systems for targeting and inspecting dangerous cargo and strengthening international cooperation to facilitate this process.
The report indicates that European port procedures and regulations would have to be fundamentally redesigned to comply with the 100 percent scanning requirement. This would represent a considerable financial burden, including 430 million for investments for scanning and radiation detection and an increase of  200 million per year in operational costs. The EC also estimates that the direct transport costs of U.S.-bound consignments would increase by approximately 10 percent and observes that ports unable to implement 100 percent scanning would lose access to the U.S. market, increasing congestion and environmental costs for other ports. Furthermore, the EC believes that the annual welfare loss from trade disruption could total some 10 billion for the EU and U.S. combined and some 17 billion worldwide. According to the report, these welfare costs could skyrocket to about &euro150 billion per year if 100 percent scanning were replicated on a world scale.!

The report favors a system where all exports and imports undergo comprehensive and effective multilayered risk management processed using a range of methods and technologies. The EU is working to fully deploy such a system by the end of this year that will (1) combine electronic systems and practical tools of collection of information prior to arrival to and departure from the EU; (2) enhance risk analysis and risk management procedures; (3) develop new technologies; and (4) coordinate enforcement by customs authorities in all EU member states.

In addition, the EU is seeking to intensify international cooperation with the United States and other countries to “maximize effectiveness and efficiency” and may also consider strengthening bilateral cooperation on such matters as ensuring effective collection of quality data; exchanging relevant security information; implementing mutual recognition of trade partnership programs and other security controls; developing and spreading utilization of new security technologies, including scanning; and building capacities and training of staff for effective implementation.

Secretary of Homeland Security Janet Napolitano told the Senate Commerce, Science and Transportation Committee on December 2, 2009, that her agency will seek a two-year extension of the July 2012 deadline for achieving 100 percent scanning of all inbound ocean-borne cargo containers. Napolitano explained that the Department of Homeland Security would require significant additional human and technological resources that do not currently exist, as well as the redesign of many ports, to be able to comply with the current deadline. The law allows Napolitano to extend the 100 percent cargo scanning deadline by two years and to renew this extension in additional two-year increments if she certifies to Congress that systems to scan containers (at least two of the following criteria would have to be met).

-are not available for purchase and installation
-do not have a sufficiently low false alarm rate for use in the supply chain
-cannot be purchased, deployed or operated at ports overseas, including, if applicable, because a port does not have the physical characteristics to install such a system
-cannot be integrated, as necessary, with existing systems
-will significantly impact trade capacity and the flow of cargo
-do not adequately provide an automated notification of questionable or high-risk cargo as a trigger for further inspection by appropriately trained personnel